“We are now gearing up to take the person completely out of the cab on public roads in the state of Florida,” says Starsky Robotics CEO Stefan Seltz-Axmacher. “We’ve been testing on Florida roads with people in the cabs for a couple of years. We are starting off in the easiest conditions, in good weather, and with good lighting. In time, we will start driving in light rain and at night. But to start off we will be focusing on the daytime.”
Actual Driverless Truck — With No Passenger — Recently On the Road in Florida Test
Stefan Seltz-Axmacher, CEO of Starsky Robotics, discusses their imminent plans to launch fully autonomous driverless long-haul trucks in Florida in an interview on Fox Business:
Gearing Up To Take the Person Completely Out Of the Cab
We’ve been testing on Florida roads with people in the cabs for a couple of years. We are now gearing up to take the person completely out of the cab on public roads in the state of Florida. We are starting off in the easiest conditions, in good weather, and with good lighting. In time, we will start driving in light rain and at night. All of these conditions are within our operational design domains. We see different areas, different things that are hard, and things that are easy. But to start off we will be focusing on the daytime.
What’s interesting about long-haul trucks is frequently they just drive between different distribution centers which themselves are in industrial areas. That’s where we are focusing on. We are not driving in downtown Miami or mid-town Manhatten. We are driving in places that are slightly more rural between warehouses that are immediately next to the highway. We will be doing broader rollouts next year but we will start doing initial road unmanned tests later this year. We will make sure the local authorities know (which roads we will be driving on) and then we will let the public know afterward.
Starsky Robotics Speed Record For Unmanned Truck in Florida
We Are Building Uber Drivers
We actually operate as a carrier ourselves. If you think about Uber, we are not building Uber or Lyft and we are not building Toyota Priuses. We are building Uber drivers. On the Uber and Lyft side, we are working with companies like C.H. Robinson and Schneider who are then selling our capacities to shippers. So if you can think of a large CPG we’ve probably hauled freight for them. We are building the software but we are also operating the trucks themselves.
Warning other drivers that a truck is self-driving is actually kind of an open question. The issue is, and this is a thing that we’ve seen in regular tests with a person in the cab, that we will have a lot of people driving next to us and see that there is a bunch of cameras (that get distracted). It seems like that if we had signs (saying that the truck is self-driving) that in itself may cause an issue.
Starsky Robotics Launching Fully Autonomous Long-Haul Truck in Florida
“We have something brand-new we call the Commerce Page Designer,” says Mike Micucci, CommerceCloud CEO at Salesforce. “It allows you to create experiences with clicks not code. You can literally drag and drop things around on the page and just put them right where you want to. You don’t need to be a programmer or a data scientist to do it. Your marketers and your merchandisers can build those experiences super fast to respond to different market changes.”
You Have To Really Put the Customer Right At the Center
In today’s industry, it’s not just about showing up and having a pretty picture you have to really put the customer right at the center. When they are there experiencing your brand you’re not delivering just the premium experience but you’re personalizing it to them. It’s not just on the shopping site it’s everywhere they go, from how you engage with them on social all the way through on customer service.
Putting the customer at the center to deliver a premium, a personalized experience, that’s a differentiator today. That’s what the customers are expecting everywhere they go. That’s is the key.
Commerce Page Designer Creates Experiences With Clicks Not Code
Our team has been working all year to get ready for Connections. We’ve got some great news that we’re going to showcase. First and foremost, we have something brand-new we call the Commerce Page Designer. It allows you to create experiences with clicks not code. You can literally drag and drop things around on the page and just put them right where you want to. You don’t need to be a programmer or a data scientist to do it. Your marketers and your merchandisers can build those experiences super fast to respond to different market changes. That’s one of the biggest things that we’re producing.
The second thing is we also have a lot of new tech for developers. We’re connecting Heroku Solution kit and Commerce together in a whole new way. With this new Heroku Solution Kit, which includes templates to help you build mobile apps, shopping apps, and service cloud apps. They are all right there in front of you so they developers can be super productive with this great environment with Heroku where you can manage and build apps.
Thirdly is MuleSoft. It takes on average about 39 different systems to pull off a commerce scenario. Those are back-end systems like ERP, your order system, and inventory. What we’ve done with MuleSoft is we made it a lot easier to connect commerce through MuleSoft to all those legacy systems through one unified layer. So today, we’re announcing this new MuleSoft For Commerce Cloud Accelerator so that developers have a whole set of preset of APIs so they can jump-start that process.
Those are three great innovations. One for all your marketing and merchandisers. Then there are two great innovations for the developers that make them much more productive. Our goal is to help you not only deliver premium experiences but do it really fast.
Einstein and AI Are Really Reshaping Commerce
So what is next on the horizon? First and foremost, we always listen to our customers tell us here are the things that they need to drive their business. But what you should be looking for is how Einstein and AI are really reshaping commerce. You’ll see that in how Einstein is not just doing product recommendations but reshaping the entire customer experience.
Einstein takes away of a lot of those things that you used to do manually, let’s say like visual search where you can shop by pictures, where Einstein will figure out, hey, what’s in that picture and make it really easy to add it to the cart. It can take a lot of the guesswork out of it and just really make the shopping experience delightful. So stay tuned for a lot more AI and a lot more Einstein.
https://youtu.be/Wpu7zVQTZ-Q
Salesforce Commerce Page Designer – Creates Experiences With Clicks Not Code – Mike Micucci
“All of a sudden people are realizing that Disney is going to take the advantages that they have, content that nobody else has, moats that give them actual real leverage in the negotiations, and then they’re going to actually take a playbook out of these more digitally native companies,” says Sean Ammirati of Birchmere Ventures. “They’re going to actually build direct relationships with their end customers. They’re going to switch their business model from transactional to a subscription model.”
Sean Ammirati, Partner at Birchmere Ventures, discusses how Disney has potentially reinvented themselves with the launch of Disney+ in an interview with Bob Evans on the always engaging and relevant Cloud Wars podcast:
Disney Takes a Playbook Out of Digitally Native Companies
Innovation is not relegated simply to 20-something small brand new companies. Large companies are able to leverage their assets and their unfair competitive advantages to play in this also. For instance, Disney recently had its Investor Day and announced its Disney Plus streaming offering. Disney Plus has been framed by a lot of people as a kind of “Netflix Killer.” The interesting thing about what’s happened there is the reaction from Wall Street tech journalists. All these different groups have been incredibly positive.
All of a sudden people are realizing that Disney is going to take the advantages that they have, content that nobody else has, moats that give them actual real leverage in the negotiations, and then they’re going to actually take a playbook out of these more digitally native companies. They’re going to actually build direct relationships with their end customers. They’re going to switch their business model from transactional to a subscription model.
How Do We Transform Our Relationships With Customers?
These are things that we’ve been talking about for four years with lots of legacy companies under the category of digital transformation. But it’s hard every time someone steps up and tries to do that, you’ve got to re-educate Wall Street on how to think about your financial metrics. It turns out that GAAP accounting is not that similar to subscription accounting. To be fair, that’s an easier challenge than it was a few years ago. I remember years ago when Adobe made that pivot and what a struggle that was to say (to investors) we’re going to make less money next quarter and you should be excited about that. Their stock went through kind of a full J-curve there as they walked people through it.
What was encouraging is after Investor Day there was a massive jump in Disney stock. All of a sudden these pieces that you’d watch the leadership put together for a while kind of came into a full mosaic picture. Not only did Disney stock shoot up but this arch competitor Netflix, they took a hit right away, although they’ve come back a little bit with recent earnings. I’m hoping that other CEOs in other boardrooms are taking note of this and asking themselves the same questions. How do we create products and services that transform our relationships with our customers to allow us to have that same type of growth mindset?
Case Study: How to Be a CXO In This Subscription Economy World
We have gotten to a point where we assume that if you’re a company that was born in the digital age and you’ve gone through the full capital formation prospect and gotten out and gotten public you must have certain things in your DNA that makes you the only organization who can win a market. Just look at the grocery industry. Amazon’s coming into grocery so I’m sure Amazon’s going to be the winner in that business. Maybe. But then you see the largest grocery chain in the United States (Kroger) partnering with Microsoft to actually be proactive instead of reactive.
Companies can actually play in this business that weren’t born in the last thirty years. Disney is a great illustration of that. Now Disney needs to continue to execute. They’re going to need to actually finish the vision that they cast. They’ve got to launch these. They’ve got to make it work. They’ve got to pick the right partners. I really think in a couple of years this will be a case study lots of executives point to and say, man, we can do it. In the same way that the Adobe thing has been how to be a CFO in this subscription economy world that we live in.
Disney Takes a Playbook Out of Digitally Native Companies – Sean Ammirati on Cloud Wars podcast
“There’s a gap between what they think is happening and really what’s going on,” says Qualtrics CEO & Co-Founder Ryan Smith. “So we said, hey, we’re going to go hard into developing the coolest, easiest, and most sophisticated employee experience product (EmployeeXM). We’re going to build that and we’re going to tie it together with the customer experience.”
Ryan Smith, CEO & Co-Founder of Qualtrics, discusses the genesis of Qualtrics and how it has evolved into a sophisticated and integral platform for the enterprise in an extensive interview with Jason Calacanis:
We View Ourselves As a System Of Action
In the beginning, it was very much around being able to collect data, kind of being on the front end of that. You were able to collect data. You were able to put it into an analytical system and then you were able to report on it. Because of that, we were kind of branded as this survey platform for a long time. I’d say over the last eight to ten years all the survey is a form. There’s a form engine that allows you to do anything you could ever want to do with a form. A form can be through text, a form can be through a chatbot, it can be through anything. Then there’s an analytical platform and then there’s a reporting platform.
A lot of our investment has been into actioning. We view ourselves as a system of action. How do you actually gather data that doesn’t exist? What experience management is — most organizations are in a world where they’ve resigned to the fact that they have all the data that they need. From our standpoint and what we see it’s the opposite. We’ve got operational systems that are telling us what’s happened. But the “why” is able to be collected in ways that never could have been done in 2002 because we have such amazing access to people. We think it’s just starting, especially now that we can go gather the “why” data through 13 or 14 different methods. It all comes together and you get a full picture. You see what happened and now you get to see “why” and that’s pretty powerful.
If you’re thinking about the Google Analytics side it would be like these people visit our site. These people abandoned their shopping carts. These people are doing this. Or I’m an LA Hotel and I see a bunch of people from LA visiting. I don’t know why they’re visiting. They’re not staying with me. They used Qualtrics and the first ten people say that they’re there for the happy hour menu. The one person shop running IT just pops up the happy hour menu through Qualtrics without changing their whole website. Now they’re at home and they’re delivering a great experience and it only shows up for the people from LA.
EmployeeXM – Coolest, Easiest, and Most Sophisticated
If you look at the airline industry one of the interesting things is we power probably all the feedback on the 30 or 40 different airlines around the world. Most people know Qualtrics for the customer feedback because they’ll fly and they’ll get an email or a text that says thumbs-up thumbs-down, how was your experience? What we’ve seen as we launched the XM (Experience Management) platform, and this is what SAP is so excited about, we created this category because of all the uses we were seeing on Qualtrics. Our employee experience was taking off in a way where we were like, whoa, 50 percent of the customer problems have to do with an employee.
Then at the same time, the average tenure here in the Bay Area is like 18 months. I don’t know one CEO that says we’re going to go recruit and spend all this money but we’re going to bring people in for only 18 months. So there’s a massive gap. There’s a gap between what they think is happening and really what’s going on. So we said, hey, we’re going to go hard into developing the coolest, easiest, and most sophisticated employee experience product (EmployeeXM). We’re going to build that and we’re going to tie it together with the customer experience.
The Inside Manifests Itself On the Outside
From the time they start in the company to the time they exit how do we know everything that’s going? Even in the recruiting process, how do we make sure that as a company what we think we’re delivering is being received on the other side? I believe the inside manifests itself on the outside. We’re seeing this across brands. Now we’re seeing the customer and the employee. If you look in an airline, they’re using us on the customer, the employee, the product, and the brand side.
If you look at when someone goes and shows up to a gate a lot of times they’re upset before they even get there. The employee deals with an upset customer and that impacts the entire experience. When you rate or you think about how your flight was you’re only thinking about the brand. It’s a bunch of experiences tied together. We’re helping organizations manage all their experiences for the first time on one single platform. It doesn’t make sense that you’ve got five different software’s doing this. We’re doing this at an enterprise level. That’s how people are using it.
EmployeeXM – The “Coolest” and “Most Sophisticated” Employee Experience Product – Qualtrics CEO Ryan Smith
“Everything can be digital at the end of the day,” says Wingstop CEO Charles Morrison. “We still take a lot of phone orders and a lot of people still walk. So every time somebody accesses us we want the opportunity to digitize that transaction. Why? Because the digital transaction tends to have almost a five-dollar higher average ticket and is more profitable for our franchisees which means a better return on investment and more new restaurants to grow on.”
We believe it’s a fantastic partnership with DoorDash. What they focus on is making merchants successful. As the merchant that’s exactly what we want. And they take care of the logistics. In our partnership, we’ve made sure that we are always working together to ensure that no matter how you access Wingstop, whether it be carryout or walk-in or through delivery, you’re going to get the same great experience. We believe they’re best positioned to provide that.
Everything can be digital at the end of the day. We still take a lot of phone orders and a lot of people still walk. So every time somebody accesses us we want the opportunity to digitize that transaction. Why? Because the digital transaction tends to have almost a five-dollar higher average ticket and is more profitable for our franchisees which means a better return on investment and more new restaurants to grow on. I think people spend more time with the menu (on digital). They get to know the menu. They add a couple of items on to that and they’re not as intimidated by the phone call and the rush that they see at the front counter.
Digital Technologies Create Efficiencies To Help Us Grow
We’ve been a socially active brand as it relates to social media for many years. We’ve become large enough and have scaled to national advertising. Our franchisees generously added one percent to the advertising spend so they now spend four percent to a national fund. That has been redeployed into fantastic new media and new creative which is really helping drive that same point 7.1% comp that you saw in the first quarter.
In our brand, we’re pretty well insulated (against labor shortages). We have a very small roster already, so in that small footprint, it doesn’t take a lot of people to operate a Wingstop. I don’t know that you’ll necessarily see us doing anything to remove the number of people in a restaurant. We do believe through digital technologies and further digitalization of our business that we can create efficiencies that create capacity that will help us to grow. This will take the pressure off the labor line.
Everything Can Be Digital At The End Of The Day, Says Wingstop CEO Charles Morrison
Major ocean container carriers CMA CGM and MSC Mediterranean Shipping Company (MSC) are joining TradeLens, a blockchain-enabled digital shipping platform, jointly developed by A.P. Moller – Maersk and IBM. With the addition of these carriers on the TradeLens platform, nearly half of the world’s ocean container cargo will be using blockchain technology to dramatically improve costs and efficiencies.
Bridget van Kralingen, Senior Vice President of IBM Global Industries, Clients, Platforms & Blockchain at IBM, discusses the addition of major ocean carriers to the TradeLens blockchain-enabled digital shipping platform in an interview on Bloomberg:
Blockchain Technology Could Reduce Shipping Industry Costs By 20%
Essentially we announced yesterday that with the addition of MSC and CMA on to the TradeLens blockchain more than 50 percent of the volume of the containers of the world’s shipping industry will be on a blockchain that we’ve developed in collaboration with Maersk. What this means is full transparency and a massive reduction of paper exchange. An average shipment takes about 200 document exchanges between the multiple parties; the freight forwarders, the shippers, the carriers, customs, and ports.
The World Economic Forum estimates that’s about 20 percent wastage from inefficiencies in the supply chain. The technology of blockchain allows all these multiple parties to immutably store the records and advance the records as the shipments move. This means less wait times. It means carriers and shippers know where the goods are. It basically means things can be cleared a lot faster, all leading to bigger inclusion in the shipping industry.
Starting To See Blockchain Technology For Enterprise Really Scale
The whole ecosystem will benefit so much in terms of the efficiencies. If you think about it, rather than having to interface 200 document times, it occurs once by putting your data on the blockchain. This is a situation when the ROI for every single industry participant is very strong.
The second thing, which is really important and why we’re starting to see the blockchain technology for enterprise really scale in terms of what IBM has been building for our clients across numerous industries, is that there’s a level of security in here and there’s a level of speed and efficiency. It’s easy to actually set up these networks. The difference is that these solve problems that no one company could solve on their own.
Blockchain Technology Reducing Costs
The way that the system works is that all the participants pay a very small amount to belong to the blockchain. It is a flat rate but does change according to volume. It is a very de minimis amount and the real way that the blockchain works is by many many participants belonging to the network and by the fact that those participants have a reduced cost.
Another example of this is we have a blockchain in the consumer and retail industry called Food Trust which tracks provenance and sustainability of food built in conjunction with the industry. It allows food to be tracked and recalled in two seconds versus six days. That has got such a strong economic and consumer value. The other big payback is that for many of our clients they’re looking at the idea to have trackable, sustainable, consumer presentations. So you can put diamonds on a blockchain and say they aren’t conflict diamonds. This is very powerful for consumer provenance and sustainability.
Blockchain-Powered Shipping Industry Platform To Dramatically Reduce Costs
“We dropped back several years ago and started thinking about building the Target of the future,” says Target CEO Brian Cornell. “It really started with an investment in understanding the consumer and really understanding what they were looking for and how to build the capabilities starting with data science to really guide us through that journey. Whether that’s technology or supply chain capabilities, product design, or our focus on execution at the store level, data and analytics have been important guideposts for us as we’ve gone through this journey.”
Brian Cornell, CEO of Target, discusses the details of how the company is building the Target of the future in an interview at the Stanford Graduate School of Business:
Reimagining Stores and Investment in Technology is Paying Off
Target’s (current success) is really a combination of a number of things that we’ve been working on for several years now. If I go back to February of 2017 we laid out a three-year vision for the company. We said we’re going to invest billions of dollars. At that point, I said $7 billion dollars over a three year period to invest in reimagining our stores, in building new smaller stores and urban centers and on college campuses, reinvest in our brands, invest in technology and fulfillment capabilities, and make a big investment in our people.
The success we’re seeing right now is really a combination of all those elements starting to mature. We’re executing at scale and they’re all starting to work together. That’s driving for us great top-line growth, market share gains, and importantly more traffic in our stores and visits to our site.
In Most Cases Shopping Starts With the Mobile Phone
I actually think blend (of digital and physical) is the right term. I think from a consumer standpoint they’ve really lost sight of whether they’re shopping in a physical environment or a digital environment. In most cases, their shopping starts with that mobile phone in their hands, that digital device. It’s how they decide where they’re going to shop and what they’re looking for. If you went to one of our Target stores this afternoon I guarantee you we’d find consumers with a phone in their hand, they’d be looking at their latest Pinterest, they’d be checking things on their favorite digital site, and they’d have their shopping list there.
That device really guides them through the shopping experience. I think more and more there’s a blurring and a blending that’s taking place and it’s a combination of both. The consumer today is enjoying the fact that shopping has become really easy. They get the best of both. They get a physical experience when they want it and if they don’t have time they can shop from their desk or from their classroom. They’re constantly in touch and we’ve made it really easy now for them to interface with our brand on their own terms.
Building the Target of the Future
We dropped back several years ago and started thinking about building the Target of the future. It really started with an investment in understanding the consumer and really understanding what they were looking for and how to build the capabilities starting with data science to really guide us through that journey. I can talk a lot about strategy, but the other thing that we’ve recognized is how important it is to have the right capabilities in place. Whether that’s technology or supply chain capabilities, product design, or our focus on execution at the store level, data and analytics have been important guideposts for us as we’ve gone through this journey.
We’ve been fortunate in that we’ve recruited quite a few Stanford grads. I think what’s attracting them to our business is the richness of our data. The fact that on an average week we get 30 million consumers shopping our stores and a similar number going to Target.com. We have all this rich data and we understand where consumers are shopping, what they’re looking for, and I think they’ve been really intrigued by the ability to take that data and help us build a future.
The Consumer is Looking For a Unique Personalized Experience
I’ve certainly seen this trend towards personalization and localization. If I think about the changes in consumer packaged goods, in some cases those big brands that you and I grew up with, well they’ve been replaced by smaller local niche brands that we didn’t see when we grew up and they’re being regionalized across the country. I think the consumer today is looking for that unique personalized experience, whether they’re shopping a Target store or they’re walking through a local store right here on the Stanford campus.
I think I walked in recognizing the importance of a clear strategy for an organization. But I’ve come to realize just how important culture is, a clear purpose, and importantly ensuring that our strategy is supported by great capabilities and the importance of team. I think (as we look toward the future) we’ll still be true to the purpose we have today. It’s really focused on bringing a little bit of joy to all the families we serve each and every week and really enhancing their everyday life. I think that focus on families, that connection we have today with moms with kids with families across the country, will be as true in the future as it is today.
For businesses, especially those operating heavily within E-commerce, what do truly sustainable solutions look like? From open lines of communication to central intelligence systems, as the pressure in the shipping and logistics departments mounts, retailers have more to focus on than just creating quality goods and services. Artificial intelligence is changing the game for sustainability in supply chains.
In 2018 alone, eight out of ten customers were unlikely to shop again with a retailer after a poor delivery experience. Setting aside dissatisfaction of products, poor quality, or too high prices, consumer focus on fast and reliable delivery is quickly becoming a top priority. Between 2016 and 2017, E-commerce sales themselves grew by 16%, express shipping air freight volume grew by 9%, and US imports increased 5%. As a result, companies in the US are spending a total of $1.5 trillion on shipping and logistics, and yet, it still may not be enough.
Amazon shipping options have undoubtedly raised the bar for both consumer expectations and E-commerce as a whole. Free two-day shipping, for its millions of customers, is well worth the yearly Prime subscription and keeps shoppers localized within Amazon’s marketplace. Yet, three in four consumers would choose another retailer over Amazon if that retailer offered better delivery options – no small feat.
Perhaps more so than any other department, shipping and logistics come with plenty of unique complications and problematic inefficiencies. Too many inefficiencies and the consumer base is likely to notice. For late and unsatisfactory deliveries 90% of consumers expect a full refund; additionally, their expectations range from notifications, flexible delivery windows, and real-time tracking visibility. This can be tricky to manage for businesses, especially when juggling the existing inefficiencies of transportation of tools, equipment, and even people. Over 2018, empty trucks traveling accounted for 16% of total mileage used by just one US company and unscheduled vehicle or equipment repairs made up 65% of all maintenance costs.
Businesses with huge logistical demands need better solutions than just traditional operations efficiency standards. Now that customer experience and satisfaction is tied so deeply in with shipping and delivery, new standards are required – and smart suppliers are looking to AI. A 2017 study among retailers revealed that 71% of those retailers surveyed found that sharing logistical data like shipment, order, and delivery data, among all departments, was an important step for their business.
While AI steps into the service industry, its presence in the world of e-commerce is more symbiotic and stabilizing. With AI, retailers and manufacturers can have opportunities to aggregate data from all parts of operations, even past data, to help build better and longer lasting solutions. In more board terms, AI is able to predict market demand and shift to help recommend solutions for adjusting inventory and avoiding excess, passing efficiency on to the customer.
When the success of a business hangs in the balance of consumer satisfaction, and consumer satisfaction lies within shipping and delivery quality, smart business leaders make proactive move to streamline operations. Learn more about how AI is making sustainability possible.
Levi Strauss began trading on the New York Stock Exchange this morning under the ticker symbol ‘LEVI.’ By mid-afternoon, the stock was at $22.66, substantially higher than the price offered to institutional investors. It’s clear that investors believe that Levi’s can leverage technology and innovation to successfully compete online and in brick and mortar stores.
Levi Strauss Soars in NYSE Debut
Charles Bergh, CEO of Levi Strauss, discusses how technology and innovation are driving increased sales and market share in an interview with CNBC coinciding with their IPO:
We Are Denim and We’re the Market Leader Globally
We are denim and we’re the market leader globally. A lot of people as we were doing the (IPO) roadshow said aren’t you guys just riding the denim wave? We’re creating the denim wave. We’ve been driving the category with innovation across our men’s business and our women’s business. We’ve expanded to other categories. Last year we finished with 14 percent growth coming off of 8 percent growth the prior year. The business is really humming right now.
I believe this is sustainable for the long term. Maybe not double digits forever. But we’ve got clear runway for growth across the categories that we’re competing in. We’re building share in our core categories and expanding to new categories. Last fiscal year, when we finished the year our growth was really broad-based. If you looked at it in the categories where we competed we grew every single category. If you looked at it by geography we grew every single geography. If you look at it by channel we grew across wholesale, including US wholesale, which is a little bit of a melting iceberg right now. We grew in our own brick-and-mortar and ecommerce. It was very broad-based growth last year and we’re confident we can continue that.
We Have Built a Very Big Platform for Big Data
First of all, to be successful it does come down to strong brands. Consumers at the end of the day love an emotional attachment with their brand. We’ve recreated that that love for Levi’s. We have built a very big platform for big data. In fact just a couple of weeks ago we announced that we’ve hired a head of advanced analytics and machine learning who will sit on the executive team and report directly to me. We are mining the data that we do collect and really turning it into revenue.
Our strategies are working and one of the key strategic choices that we made seven years ago, shortly after I joined, was to become a leading world-class omnichannel retailer and it is working. The mix has shifted to omnichannel. When I joined the company it was about 20 percent of our business. Today, it’s almost a third. It is faster growing than our wholesale business and we’re continuing to invest in it. Most of our capital investment is going into retail and ecommerce and knitting that seamless consumer experience together.
Implemented New Instance of SAP and Investing in RFID
It (IPO funds) is going to go into continued investment in building out our omnichannel. So both brick-and-mortar retail as well as our ecommerce business and then knitting it together with technology. For example, we’re implementing a new instance of SAP and investing in RFID (radio frequency identification). We’ve implemented RFID across our business in the US and UK and that’s actually really turning into money. Every one of the products in our store is tagged with RFID.
I’ve actually had this experience happen to me myself in our new Times Square store. There was an item I wanted to buy and they didn’t have it in my size. A stylist came over and scanned the tag and she could see that my size was available in the back room. Just two minutes later I was in the dressing room trying it on. A year ago before our RFID that would have been a lost sale. That just wouldn’t have happened. It gives us instant clear visibility to the inventory in our store, both in front of house as well as back of house.
Levi’s Driving Market Share Through Product Innovation
Back in 2013 and 2014, the headlines were the death of denim. It was all about athletic tights and Lululemon tights. It became a throwdown moment for us as a company. We have an innovation center a couple of blocks from our office. We brought our suppliers, the mills that make denim for us, into that innovation center. We understood what women were really telling us by wearing tights. That used to be a denim occasion. They wanted soft stretchy comfortable material that made them look great and gave them confidence. That was what was driving that conversion. So we innovated around soft stretchy comfortable denim which we can now do. We developed proprietary four-way stretch so that women don’t get baggy knees, which is their biggest dissatisfier.
We relaunched our business in the middle of 2015 and we’ve grown 14 quarters in a row and in the last eight quarters at double-digit rates. It has been a huge part of our growth. We were under $800 million just on women’s bottoms about three years ago. We’re over a billion dollars today. We are number one globally with a nine percent market share, but we’re not number one in a number of markets including right here in the US. So I really do believe we can continue to grow at an accelerated rate on our women’s business. There are lots of what I like to call share donors out there for us to build share while we’re building the category.
We haven’t seen any (backlash to being an American brand). This brand stands for everything good about America. Freedom, democracy, and allowing people to express themselves. Authentic self-expression is what the Levi’s brand is all about. We’ve not seen any backlash. None. We think there are lots of opportunities still for us. I am not worried at all about denim. We are denim and we’ll continue to drive this category through great innovation and marketing that connects with consumers and sends them into our stores.
Technology and Innovation Powering Levi Strauss Growth Strategy
The recent USPS shipping structure changes will increase retailers shipping costs, says Rakuten CEO Mike Manzione. What Rakuten does is help retailers offset these increases by utilizing a network of order fulfillment centers, thereby controlling shipping costs while decreasing shipping times. “With the change to zone-based pricing for First Class Packages, all clients must reconsider how to locate their product closer to their customers,” says Manzione.
Retailers Must Locate Products Closer to Customers
Our continued expansion into major metropolitan markets is a commitment to our clients. We’re creating a network that provides our clients a greater choice and flexibility that aligns their customer base with their product. With the change to zone-based pricing for First Class Packages, all clients must reconsider how to locate their product closer to their customers.
By 2021, worldwide retail e-commerce sales are projected to be 4.9 trillion dollars (USD). At the same time, customers are demanding shorter shipping timelines. RSL is uniquely positioned as an industry leader with our nationwide network of fulfillment centers. With our increased major metropolitan presence, RSL will reduce ground transit delivery to within one day.
RSL To Open 6 New Ecommerce Fulfillment Centers
Houston and Los Angeles will be our first 2019 expansion markets. The new Houston facility will be strategic for our clients importing product and materials from all over the world – including Brazil and Germany. Los Angeles will be strategically located near the Port of Los Angeles, a major container port. The Los Angeles location will be instrumental for our clients that import product from Asia.
As a leader in the order fulfillment industry, RSL will also be employing state-of-the-art technology in all six new facilities. In 2018, RSL began deploying ‘order fulfillment robots’, developed by inVia Robotics, in its facilities nationwide and will be expanding with inVia’s automation technology in the new warehouses.
About Rakuten Super Logistics
RSL Fulfillment Centers have been carefully managed from the ground up, to create unique, high-velocity operations:
Maintain complete control of your fulfillment with a cloud-based fulfillment management system.
Save on shipping costs and expedite shipment times with the 2-Day Delivery Network.
Improve customer satisfaction and earn repeat business from shoppers.
Focus on your business by partnering with the industry leader in eCommerce order fulfillment.
With the future of retail we have crossed over the demarcation line, says Walter Robb, the former co-CEO of Whole Foods. “We’re not going back to the old retail,” said Robb. “It’s just not going to happen. That’s the combination of digital and physical. We’re in what I would call new retail, which is the integration.”
From where I sit the customer is doing pretty well. They’re spending. They’re pretty strong. There was a lot of pessimism at the back half of last year that was reflected in some of the stock prices, but I think that was overblown. We’re going to see a customer that’s doing pretty well this year in 2019 and might surprise a little bit to the upside. That being said, traditional retail models are under pressure. The customer is spending their dollars in so many different ways and places than they could before. You used to just open up four walls and open a store and now the customer has so many more options.
We do know that in the United States we’re about 24 square feet of retail space per capita and that’s two and a half times more than any other industrialized country. We have too much space so there’s going to be a winnowing out that’s going to happen here. There’s going to be winners and losers and we’re already seeing that. In 2019, I think that continues, but I do think that we’re in the second half of that. What we’re actually seeing that the mall is beginning to switch over and putting in exciting new uses and we’re seeing retail stores start to open again.
We Are Not Going Back to Old Retail
With the future of retail, we have crossed over the demarcation line. We’re not going back to the old retail. It’s just not going to happen. That’s the combination of digital and physical. You’re seeing the digital retailers, the Allbirds, the Warby Parker’s, come out and say, alright we’re going to open physical stores because we realize our customers want to experience our brand and be with us in that way. They’re bringing new ideas to that presentation of retail, which is pretty exciting.
At the same time, you’re seeing physical retailers adapt to digital ways. Take a look at Target and how they’ve employed all the new tools that they have for the customers, in-store apps and those sorts of things. You’re seeing a combination of these two. In some cases it’s adolescent and in some case it’s more mature, but we are not going back to just the simple form retailer. We’re in what I would call new retail, which is the integration.
The edge of which is actually in China with a supermarket called Hema from Alibaba, which is which is simply fantastic. It’s integrated on the back end and on the front end. I think you’re seeing retailers say, we’ve adapted to the age of Amazon and we understand this is how customers want to shop. We’re seeing a whole new generation of businesses and entrepreneurs say, I’m going to bring the customer this fusion of digital and physical in a way that’s really exciting and really compelling. We’re not going back. I opened my first store in 1978 but that’s just not as easy to do anymore because you have to have that the tools to really understand your customer personally. I think it’s pretty exciting to see what’s happening.
Physical and Digital Retailers Need Each Other
The business model on the last mile is very challenging unless you’re connected into a physical store. If you just out there floating without a connection to physical retail those have not proven to be sustainable. I think it’s clear to me that the customer wants that choice. I think the data is very clear that they want both. They’re not going to give up physical stores and that’s why you’re seeing these digital and physical retailers. They need each other and they need both parts of that to make the thing actually compelling for the customer.
I think there’ll be a shakeout. You seem some consolidation already, but the most interesting combinations are where the physical retailer buys the digital, where Target buys Shipt and where Walmart buys Flipkart or whatever you see around the world, realizing the combination is the most powerful. That will be the most sustainable from a business model perspective.
We Are Not Going Back to Old Retail, Says Walter Robb, former co-CEO of Whole Foods
Domino’s software engineers and digital ad team have created a unique AI-powered ‘Piedentifier’ to launch it’s Super Bowl week marketing blitz. Domino’s is encouraging people to send in a photo of any pizza, even if you made it yourself, and it’s system will determine what type of pizza it is and give you ten points toward a free pizza in their rewards program.
‘Piedentifier’ launching for Super Bowl week marketing blitz
We’re going to give Piece of the Pie Rewards points for any pizza. Our customers are going to be able to use our great technology to take a picture of any pizza, send it up to us, and earn ten points toward a free Domino’s Pizza. The great thing about this is our team got together and created something called the ‘Piedentifier.’ What it does is it uses your phone to look for what they have referred to as the open-faced expression of crust sauce and cheese. Anything that looks like a pizza and you’re getting ten points.
Today we’ve got more than 20 million active members of our Piece of the Pie Rewards program. We don’t know the exact number of how many customers will come on board with us, but as the leader in the pizza category, we see this as a great opportunity not only to grow the overall pizza category, but also to invite new customers in to download our app and to try our product. We feel that when customers try our product we’ve got the opportunity to bring them back again and again.
This Sunday is a huge day for us. On Super Bowl Sunday, we’re typically up about 40 percent over a normal Sunday. We’ll sell about 2 million pizzas and about four million chicken wings. Each year, it’s the biggest day of the year for us. It tends to not matter which teams are in the game. Certainly in individual cities maybe it does, but broadly across the US it’s a huge day no matter who’s playing.
Average Franchise Makes $140K Per Year EBITDA
Opening up a Domino’s Pizza store is still a terrific return for our franchisees. Across the globe cash on cash returns are better than three years in our business. Just a few weeks ago at our Investor Day, we released again our unit level average for our franchisees in the US. Once again it went up. We’re expecting it to be somewhere between $137,000 and $140,000 a unit in the US on EBITDA on a Domino’s Pizza store that you can open for $350,000.
Driving is Still a Great Opportunity
Driving for Domino’s is a great opportunity because of the volume that we do out of our stores. In a lot of cases, drivers are able to come in and earn a lot more than they can driving for some of these other businesses. As we continue to tighten down our territories through our fortressing program, it’s giving our drivers the opportunity to get more runs per hour. That means more tips per hour and in turn, higher wages.
In addition to a job that earns a decent wage driving at Domino’s is also an opportunity potentially to be a franchisee in the long term. Over 90 percent of our franchisees today started as drivers or started in as CSRs answering our phones in our stores.
Self-Driving Cars Will be Here Someday
Self-driving cars will be here someday. We don’t exactly know what day but we’re working hard to really try to understand how our customer interface with that car when it pulls up to their curb. They’re used to having a uniformed Domino’s pizza delivery expert bring that pizza to the door. So we’re learning. As the technology evolves we’re going to learn how the customer wants to interact with us and we’ll be ready when it does get here.
There is nothing short of a revolution happening in the food marketplace today and it is not a quiet one, says Walter Robb, the former co-CEO of Whole Foods. “It is disrupting things left and right, all the way up the value chain back into the farmer’s field,” says Robb.
Walter Robb, former co-CEO of Whole Foods, discusses the revolution happening in the food marketplace in an interview on CNBC:
Nothing Short of a Revolution Happening in the Food Marketplace
There is nothing short of a revolution happening in the food marketplace today and it is not a quiet one. It is disrupting things left and right, all the way up the value chain back into the farmer’s field. For me, to see these (organic) brands and to see it show up at the Super Bowl, the biggest media stage of the world, is kind of an exciting thing.
Some 75 percent of the food we eat is from 12 plants. Somebody’s woken up to that realizing, wow, there’s a whole lot of stuff that we can create from stuff we don’t even know yet. The Natural Food Expo, which is the next month in LA, 85,000 people are going to that show. This is where the energy and the edge of the food industry is at right now.
We’ve broken into this area now where there’s an amazing amount of innovation with young companies and entrepreneurs. This is where the growing edge of the food industry is now. It’s not just natural and organic but it’s this innovation around new foods and new food types.
Amazing Amount of Innovation With Entrepreneurs
You have to build the tools to really understand your customer personally. I think it’s pretty exciting to see what’s happening. On the physical side, Walmart is doing a lot of things, Kroger is doing a lot of things, and Whole Foods is doing a lot of things to try to integrate digital and physical retail in a way that gives the customer a very rich experience.
I do think in terms of the food service delivery, Grubhub has had phenomenal growth. What’s happened is the world has woken up to how exciting food is again. We kind of went along after World War two for a number of years with this kind of dull drum of production, just regular stuff with the major CPG brands.
If you get a $5 latte and it’s probably a $5 delivery charge at what point does the customers say that’s a great value problem? I don’t know, but I think we’re going to find out. I do think this idea that the customer wants the convenience is here to stay and that they’re used to having that option. In some cases, they will choose it. Where that line is it’s too early to say exactly where they’ll say, that’s too expensive or that’s not a good deal.
SAPannounced the completion of its $8 billion acquisition of Qualtrics which brings critical real-time customer experience data to its customers. SAP CEO Bill McDermott explains how the combination of Qualtrics’ Experience Management (XM) Platform with SAP’s enterprise software and cloud services is not only a game changer for companies, but solidifies SAP as the world’s business software leader:
“Where did we leave them in the dust? We basically out innovated everybody in terms of how you run your business better. Now the idea is how you create an unbelievable human experience so you inspire your people to take care of your customer and create a loyalty effect that’s unlike any other company in the industry. That’s what we do.”
Bill McDermott, CEO of SAP, talks about how the integration of Qualtrics into SAPs enterprise solutions will help businesses know their customers with real-time sentiment analysis, in an interview with Fox Business at Davos 2019:
With Qualtrics Your Brand Will Become a Religion
I think it’s really important that you focus on the business of your customer and stay obsessed with that and not get caught up in a lot of tech jargon. That’s why I’m glad we’re the business software market leader.
There is a huge trust deficit in the economy. Customers aren’t necessarily getting what they paid for which is why there is a $1.6 trillion deficit from customers that defect from companies that are out there in the marketplace today. So how do you keep a loyal customer? Today’s systems create operating data. You know your customers, you know your people, you know your suppliers. But we need to know what are consumers saying in real time, in the moment? We need that sentiment analysis.
Qualtrics is the number one experience management company in the world. From now on, your customers, if you are CEO, will love your products. In fact, they will be obsessed with them. Your brand will become a religion because every employee is an ambassador that’s connected inextricably to the customer experience. That’s Qualtrics.
If you are a customer of SAP, now you have all the experience data. I call this X-data. This is data from all the consumers that are experiencing your product and your brand. You combine that with the O-data which is all the operational aspects of how you run your company, from your demand all the way through to your supply. You know everything. You take X plus O and you have the winning formula.
The Enterprise Has Been Redefined by SAP
We surveyed, with Qualtrics and SAP, along with the World Economic Forum here, we surveyed 10,000 individuals on a random sample in 29 different countries. Once of the questions was, “What are you really worried about out there?” Most humans said we are worried about being replaced by robots. We said, “Is tech for good or is tech for bad?” What’s happening in your world with the perception of technology? They said, “A little bit better than negative, but somewhat ambivalent.” That’s a concern.
They said that they are basically trusting the people that run their companies, even more than the people that run government. There is a trust deficit out there. It’s really important that we close that trust deficit at the leadership level. It’s also important that companies get the human experience going with their own employees and their customers. That’s why I think that this experience management positioning for SAP is fundamentally going to be a moment in time where the enterprise has been redefined by SAP.
Over 77 percent of the world’s transactions run through an SAP system. We manage everything from the customer relationship to how you manage your people to how you build great products and how you ship on time and deliver. Now we have experience management which is the ultimate touchpoint for customers, and we put it all in the cloud. So you can be nimble, you can be agile, and you can upgrade quickly. You don’t need a whole lot of resources to maintain these systems. We are moving faster than anyone in 25 industries and in 193 countries around the world.
About the S/4HANA Upgrade
S/4HANA is now the system from the demand signal of your consumer in any channel including ecommerce. We know your consumer. We align the product in the proper configuration, at the proper price based on the customers history and all the loyalty that they should earn in their business with you. We ship. We take care of the whole supply chain. You get what you want at the price you procured for anyplace in real-time in the world. That whole value chain is SAP.
4HANA is now in a cloud. So you can run your entire company from end-to-end on top of SAP’s 4HANA platform in the cloud. Game change. Again, I go back to, that’s all the operational data and all the operational processes. Now, if you can add experiences to this with Qualtrics you’ve got an unbeatable competitive advantage.
I’m signing up customers left and right on this idea in Davos because this has been the number one thing that businesses have forgotten. You have to have the experience under control with your consumer and it has to be real-time sentiment analysis. Just think, it’s five times more expensive to get a new customer than to keep the one you have. Don’t you want to know how they’re doing?
No Signs That There is This Global Slowdown
We have a very strong business. There are no signs in our business that there is this global slowdown. Because we serve the best run businesses in the world we are usually an early indicator of what’s going on out there. We see a very optimistic future. Our pipelines and our business model have not changed one iota. I think there is this disjoint between the consumer companies and the consumer world and the enterprise.
SAP CEO Bill McDermott: “We out innovated everybody.”
SAP Bill McDermott: “No signs that there is this global slowdown.”
New Relic provides deep performance analytics for every part of a business software environment. It enables companies to easily view and analyze massive amounts of data, and gain actionable insights in real-time. Whether it’s for a popular mobile app, an online video game with millions of users, or a huge ecommerce platform, they all rely on critical New Relic insights to keep revenue flowing.
Lew Cirne, founder and CEO of New Relic, talks about how critical real-time insights from New Relic are to a companies revenue stream in an interview with Jim Cramer on CNBC:
When It’s Game Time for Retail New Relic is There
For retail obviously, so much of their business, particularly their web business depends on a very small number of days; Black Friday, Cyber Monday, etc. That’s game time. That’s the moment of truth. That’s when we’re working our hardest to make sure our software is there to make sure our customers can see what’s going on in real-time. Our customers were thrilled with the performance and availability that they delivered which turns into business results.
If your site is slower or down on Cyber Monday, forget it, you’re going to miss your quarter. You may never recover from that because you also have a brand hit. So it’s so vital. This is not nice to have software. Anybody who is competing on their software needs New Relic’s platform in order to succeed.
We’re a Massive Cloud Operation
We’re a massive cloud operation. We’re collecting millions of data points every second from mobile applications and from cloud infrastructure every time somebody’s pressing a button to buy something and every time someone’s watching this video on the CNBC app. We’re measuring the health of that and we do that on a massive scale. That’s one of the things our customers love.
When Fortnite said, “Hey we’ve got this huge app. It’s the biggest in the world and we want to monitor on New Relic.” We’re like great. Your biggest day is just another day for us. We collect so much data and we can do it for you.
New Relic Monitors Fortnite to Keep it Running for Millions of People
Epic Games is the company that created Fortnite and if you have kids or you’re into games this game has taken the world by storm. It’s the most popular game in the world. If that game is not working millions of people know about it and the company is affected.
So they rely on the New Relic platform to see everything in real-time on how that game is performing. It’s a very complex piece of software that has to work flawlessly in real-time. We measure everything going on in that game so that the builders of Fortnite can keep it running for millions of people 24/7.
There are different companies that do different things around observing what’s going on in this space but were the applications-centric company. What does that mean? It means that when you’re playing Fortnite what you’re doing is you’re using software.
We’re measuring the software in real-time. We do it in a cloud platform that integrates what’s going on in the software with the infrastructure and with the end-user experience, like the mobile app. We see all that together and do it in one unified platform and our customers love us for that.
New Relic Helps CNBC Scale Mobile App in Real-Time
At CNBC, you just launched an incredible new revenue app in the fall and it’s amazing. I use it a lot and I love it and again this is an app that’s getting a lot of uptake. I was talking to the team and they said customers love what the app is doing for them and they want to use it more and more. That means they have to scale.
When more and more people are using that app how are you able to handle the scale when people want to see the news in real time and want to see the stock quotes in real time? We provide them the visibility that gives them the confidence to move faster and scale to this amazing demand that the CNBC app is generating.
New Relic Helps Companies Move Fast in a Multi-Cloud World
This is so important to our customers. It’s clear that we’re entering a multi-cloud world. Obviously, Microsoft’s doing well and Amazon doing very well. We had a great show at re:INVENT. And there’s some hybrid cloud as well. What our customers are saying no matter where my software is running I want to see it all in one place. I’m sick of moving from one tool to another to see a complete picture. They turn to the New Relic platform to see it all in one place. That enables them to move fast with confidence.
Anywhere there are systems that need to perform well and scale well, those are systems that need New Relic. What we say to our customers is building great software is not easy, but it is the foundation upon which companies can build great competitive advantage. We want to partner with our customers to deliver amazing software that delights our customers and grows their business.
“Digitizing Unilever is one of my top priorities,” says Unilever’s new CEO Alan Jope. “How we digitize marketing. How we digitize working with our customers. Digitizing our supply chain. Digitizing our people processes. You are going to see a strong digital emphasis in my agenda for Unilever.”
Alan Jope, CEO of Unilever, discussed Unilever’s growth in Asian markets and his priority to digitize the company in an interview on Bloomberg Markets and Finance this morning:
Digitizing Unilever is One of My Top Priorities
In China, all of our ecommerce partners are very important to us. That’s where a lot of the growth is. That’s because that’s where consumers are choosing to shop. That integration between ecommerce, search, social, and other digital platforms is also happening in the west. Digitizing Unilever is one of my top priorities. How we digitize marketing. How we digitize working with our customers. Digitizing our supply chain. Digitizing our people processes.
You are going to see a strong digital emphasis in my agenda for Unilever. We are hiring people with good digital skills like crazy at the moment. We are bringing in digital natives and at the same time reskilling the Unilever team.
China Has Become a Stable Part of Our Business
China is a special place for me, I lived there for five years quite recently. I’m delighted to share that China has become a stable part of our business actually. We are seeing good growth year in and year out. Consumers are engaging with the type of brands we are selling and increasingly we are developing products in China for the Chinese market. In amongst all that volatility, it seems like the consumer products segment is one of the stable parts of the Chinese economy.
We have a tremendous global footprint. We are very globally diversified. We are used to dealing with geopolitical shocks and movements. At the moment that is certainly not a significant impact on our business. We are seeing overall Asia doing very well. In particular Central Asia. The markets in India, Pakistan, and Bangladesh are really doing extremely well. As I mentioned China has been a stable source of growth. Also, that important part of the world where people are really moving into the consumer products markets Southeast Asia. We are starting to see a recovery led by our big business in Indonesia.
Starbucks CEO Kevin Johnson isn’t worried about competitors in the fast-growing coffee market in China. He says that competition is actually broadening the addressable market by introducing tea drinking Chinese to coffee. Starbucks has nearly 3,700 stores in China already and is generating double-digit transaction growth. For Starbucks, their growth in China and around the world continues to be driven by providing a unique customer experience that is like no other in their industry.
Kevin Johnson, CEO of Starbucks, talked about how their unique customer experience is driving massive growth in China in an interview on CNBC:
We Are Playing the Long Game in China
The number one metric that we look at in China is total transaction growth. Those total transactions come from a combination of new stores that we build as well as same-store comps. We increased the number of stores in China by 18 percent this quarter and so if you put all of that together we had double-digit transaction growth in China. China is a market that is all about first mover advantage. It’s about building new stores and expanding our presence.
In fact, we’re now approaching 3,700 stores in China. We entered ten new cities last quarter and we’re now in 158 cities in China. The addressable market and the growth opportunity in China is significant. So the priority we have is really expanding our footprint while we continue to enhance the experience in our stores, drive beverage innovation, and enable new channels for customers to engage with Starbucks, as we are with Starbucks Delivers. We are playing the long game in China.
Starbucks Coming Out on Top in China
Whenever you have a large addressable market around coffee in China you’re going to have a lot of competitors come in. Some of those competitors are going to try and differentiate in different ways. They’re going to have to use price and be highly promotional in what they do. For Starbucks, we differentiate on the in-store experience. We differentiate on the quality of our coffee and we differentiate on the digital reach that we have through our partnership with Alibaba.
The one thing that the competition is certainly doing in China is expanding the addressable market for coffee. It’s introducing the Chinese consumer, who is primarily a tea drinking culture, to coffee. That’s helpful for the growth in the addressable market for Starbucks. We’re confident we’re going to play our game. We know how to create the kind of experience and leverage the brand strength that we have in China to create that unique differentiated opportunity for us to engage in customers. So I think if you look at the overall landscape of who is growing the most share of transactions and engagement with the customer, I think Starbucks comes out on top.
When you look at a competitor in China like Luckin and they talk about the number of units that they’re growing, I think sometimes a unit would look perhaps like a Starbucks store, but most of the times they look like a point of presence. That said, we have a lot of points of presence. We’re at 3,700 stores. We’ve also got our global coffee alliance with Nestle coming in with food services and CPG.
Extending In-Store Experience With a Digital Mobile Relationship
The reason you want to come to Starbucks is because we create that unique customer experience. We serve the world’s finest Arabica coffee. Our partners will handcraft that beverage to your perfection. We create an experience like no other in the industry. We’re going to continue to stay true to the experience we create in our stores and how we extend that experience with a digital mobile relationship.
The China Digital partnership with Alibaba is making great progress. We now have the virtual Starbucks store integrated into the Alibaba properties. That’s now reaching 600 million Chinese who use Alibaba on a daily basis. We think the strategy that we’re on is the right one. It’s it’s allowing us to continue to grow transactions in the double digits and we’re going to continue to play the long game with the strategy that made Starbucks what it is today in China.
Kroger and all retailers are fast becoming tech companies and thus have the difficult task of competing with companies like Facebook for top tech talent. According to Kroger CEO Rodney McMullen, one of their secrets to recruiting software engineers is the promise of more responsibility quicker than anywhere else.
In terms of the number of employees, I think you will have the same number but the skillsets will be a lot different. If you look at digital, for example, we have 500 people in our digital team. Within 2-3 years we will have a thousand. With software engineers, it is a completely different type of talent. Yes, we compete with (Facebook). It’s kind of fascinating.
It’s important for people to eat. It’s important for people to eat things they like. If you come to Kroger you are able to help people get exactly what they want when they want it. You get immediate feedback on something that is incredibly important. If the customer likes it you see it immediately. If they don’t like it you see it immediately. So you get great feedback.
More Responsibility Quicker Than Anywhere Else
I always tell people when we are recruiting them, I guarantee you that you will have more responsibility quicker than anywhere else. We have 25-year-old and 30-year-old people running $100 million and $200 million businesses.
On a couple of tests that we have going on right now, we have two interns that actually did the software work to get it in place. When their internship finished they went back to college and kept working with us to finish the project they worked on. It’s one of those things that you get a tremendous amount of responsibility incredibly fast.
The Future of Retail
I think the store will be multi-purpose. I think about one of our bigger stores. It wouldn’t surprise me if you had a small warehouse in the back of that store. You will use the same footprint, but half of it may be a physical store that is an experience space, half of it will be more warehouse efficiency space.
The CEO of Walmart Doug McMillion says that the company has a lot of work going on to change the company. He says that the company is becoming more digital and is changing how they work from within to get faster, more nimble, and adapt to what’s happening in retail. McMillion is a real advocate of change within the company, pointing out that what has happened to companies like Sears can happen to us too.
Doug McMillion, CEO of Walmart, recently discussed how Walmart is becoming more digital and is adapting and changing in order to compete and improve the customer experience:
Changing How We Work to Get Faster, More Nimble and to Adapt
We’ve got a lot of work going on to change the company. The company is becoming more digital and we’re changing how we work from within to get faster, more nimble, adapting to what’s happening in retail. Those plans result in lower costs. We’ve been lowering prices for customers and we need to keep doing that. We’ve got to build this ecommerce business in a way where it delights customers all the time. We’re improving in many areas as it relates to that.
Then kind of the magic of Walmart is how we put it all together. Grocery pickup has been really great for us, we’re learning how to do deliveries. There’s a lot in front of us in terms of what we control and what we can do and that’s what we’re focused on. There’s a transition going on and change that is happening inside of all businesses and across industries. It’s certainly happening within Walmart.
We’re Learning How to Put Automation in Place
We’re learning how to put automation in-place like floor cleaners that are autonomous, and also an industrial robot with a camera on it that’s looking at the merchandise in the aisle so we know where things are. It’s learning how to communicate with a device that goes up and down the aisle that checks to make sure that things are in the right place, that they’re priced right, looking to see if we have inventory above if it needs to be pulled down, and helping us as associates do our jobs better.
I think over time automation will reduce jobs, there will be a period of disruption, but with our turnover in retail, we can manage through that. We want to train people, upskill them so that they can learn to do new things. As this change is happening now we’ve already seen new jobs like personal shoppers emerge, we’ve got about thirty thousand personal shoppers in the United States now that are picking grocery orders in the stores for pickup.
Grocery Pickup Business has Grown a Lot
One of the most popular things we’ve got right now is a grocery service where you can order on your mobile app, pick a time slot and on your way home from school with the kids swing through and we put it in your trunk and you take off. That business has grown a lot and there are people that now have new jobs creating that order for you. Folks come out to the car, put in the trunk for you, talk to you for a few minutes, and that’s gone really well.
What I really think will happen is we’re going to find new jobs, delivery jobs, and jobs related to customer service in the stores. We want to improve the environment the stores, we want our fresh food presentation to be better, we want our retail presentation to be better. We will redirect some of those positions towards that.
One Constant at Walmart is Change
The truth is after learning from so many people, a little bit from Sam Walton, David Glass, Lee Scott, Mike Duke, and the leaders at Walmart. We know that retailers come and go. Businesses grow and they don’t change enough and they decline over time. Retailers do that on a bit of a faster cycle so we got a healthy paranoia and always have.
If there were a group of Walmart associates around here right now and we asked them the only thing other than our purpose and values that are constant at Walmart they would fill in the blank with change. We adapt, we learn, we learn from competition, we focus on the customer, we’re always changing.
People Are Rethinking What Walmart is as a Business
I carry an app that’s got the top-ten retailers by decade back to 1950. There are company’s on here, TG&Y, E. J. Korvette, the rise and fall of Sears and others. It’s just a reminder that this can happen to us too. Part of what I do within the company is trying to make a case for change, point to a strategy and a vision for our associates.
We’ve got great people and they rally and move and change. It’s now happening at an accelerated rate inside the company causing people to rethink what Walmart is as a business and it’s really exciting.
Digitalization is not something that’s coming, this is something that already exists, says Bank of America CEO Brian Moynihan. He says that 25 percent of their sales are done on digital. Moynihan says his goal is to bring the whole banking system to the digital age to make it more efficient for customers.
Brian Moynihan, Bank of America CEO, discussed the digitalization of banking and much more during an interview on CNBC:
Digitalization is a Big Boon for Everybody
Digitalization is a big boon for everybody in a sense in that you can continue to provide better service for the customer and take the cost structure down which then can pass through to the customer. The way to think of all this work on a consumer side is that we have 26 million mobile customers, 25 million digital customers, about 1.5 billion logins last quarter. This is not something that’s coming, this is something that already exists. About 25 percent of our sales are done on digital.
Digitalization Improves Service and Reduces Costs
All this is extremely important in how we run our franchise. What that has done for the customer is give them better services on their time, the way they want to do it, 24/7. At the same time, it reduced our operating costs so we can take out overdraft fees on point of sale debit, ten years ago now almost. What allowed us to afford that was to change the operating structure. That makes this very good.
Small banks and larger banks are participating in digitalization. We helped small banks to drive digital payments. The volumes are growing 100 percent per year for us with that and across the board.
Bringing the Whole Banking System to the Digital Age
The goal is to bring the whole banking system more and more to the digital age and make it more efficient for the customers. The key is that on the commercial side it also goes on. Everyone talks about consumers, but on the commercial side, the same impacts going. CashPro Mobile, a product we have, is up and operating very efficiently. When you think that a treasurer of a company would sit down at their desk to do an interface to send it, they want their mobile interface because that’s their daily life. It’s all good for all of the companies.
According to the Wall Street Journal Amazon is testing larger format stores with its Amazon Go cashierless technology as a prelude to a Whole Foods rollout. The WSJ appeared to have spoken with several insiders. “It is unclear whether Amazon intends to use the technology for Whole Foods, although that is the most likely application if executives can make it work, according to the people.” There are predictions by some experts and entrepreneurs that virtually every physical retail store will be checkout free within 5-10 years.
Walter Robb, former Whole Foods co-CEO, discussed the possibility of Amazon adding its cashierless technology to Whole Foods in an interview on CNBC:
Amazon May Go Cashierless at Whole Foods
I just think is part of a larger revolution that’s happening in retail and in food in general. The customers are having more and more options. Amazon Go, which is now up to 13 stores already has this deployed in a smaller store format. The application of this to a larger selection of products, most Whole Foods stores have about 35,000 units, is very exciting and very interesting.
I think we’re just seeing this massive wave of disruption and innovation in retail in general. What this does is, if you call the grocery business about $2 trillion in the US plus or minus, what you’re seeing is all these new ways in which the customer can get their food. This is part of that choice. I think one of the things that people miss about the Amazon Whole Foods merger is the fact that physical retail really matters. What this does is say, okay we’re going to try to make the physical experience a little more streamlined for people so it contrasts with the online experience. I think you just see this bevy of choices the customers never had and we couldn’t even imagine five years ago.
Whole Foods and Amazon Culture Clash Smoothing Out
It’s still early but I think Amazon and Whole Foods certainly have different cultures and different styles, but I think that Amazon has very smart and capable people and I think the cultures are beginning to find their way, both their work processes. If you think about what we at Whole Foods gained from Amazon, we got tremendous first best-in-class technology and data capabilities, the digitization of Whole Foods, was significantly accelerated.
I think for Amazon they got a great brand in fresh foods which they’d struggle up to that point. They got the knowledge of the customer in the physical stores versus just the digital world and they got proximity to about 85% of the US population. It was a real win-win-win combination. People forget that food is probably the largest sector in the economy. This is a very significant deal that happened and I think a proxy for the fact of how business and commerce in general are evolving so quickly.
